HSBC 2002 Annual Report Download - page 208

HSBC HOLDINGS PLC
Notes on the Financial Statements (continued)
206
At 31 December 2001 the assumptions used to calculate scheme liabilities for HSBC’ s main defined benefit
pension schemes under FRS 17 were:
D
iscoun
t
rate Inflation Assumption
Rate of increase
for pensions in
p
ayment an
d
deferre
d
pension Rate of pay increase
%%%%
United Kingdom..................... 5.9 2.5 2.5 3.75
Hong Kong............................. 6.5 N/A N/A 6.0
United States .......................... 7.25 2.75 N/A 4.0
Jersey...................................... 5.9 2.5 2.5 4.25
Brazil...................................... 10.25 5.0 5.0 6.05
France..................................... 5.5 2.0 2.0 3.5
Other ...................................... 4.5-6.25 1.5-2.0 1.5-2.0 2.5-3.5
The assets in the defined benefit schemes and the expected rates of return are:
HSBC Bank (UK) Pension
Scheme Other Schemes
Expected rate o
f
return at 31
December
2002
Value at 31
December
2002
Expected rate o
f
return at 31
December
2002
Value at 31
December
2002
%US$m %US$m
Equities .......................................... 8.5 5,682 10.75 1,491
Bonds............................................. 5.0 2,032 6.3 1,418
Property.......................................... 7.0 1,139
–
–
Other .............................................. 3.75 415 3.1 402
Total market value of assets........... 9,268 3,311
Present value of scheme liabilities . (12,094) (4,030)
Deficit in the schemes.................... (2,826) (719) *
Related deferred tax asset .............. 848 150
Net pension liability....................... (1,978) (569)
Less: net amounts provided in the
balance sheet for unfunded
schemes ...................................... 402
Net unprovided pension liability.... (167)
* Of the deficit in other schemes, US$832 million relates to schemes in deficit and US$113 million relates to schemes in surplus.
Of the schemes in deficit, US$442 million relates to unfunded pension schemes in respect of which a provision, net of deferred
tax, of US$402 million has been made. In relation to main schemes, there is a surplus of US$86 million in HSBC Group Hong
Kong Local Staff Retirement Benefit Scheme and a deficit of US$79 million in HSBC Bank USA Pension Plan.
The net pension liability will have a consequent effect on reserves when FRS17 is fully implemented.